What is cryptocurrency mining, and how does it work?

Cryptocurrency mining is a process where transactions from a network are validated and grouped, and then those transactions are added to a blockchain.

This process gives the network security and facilitates the generation of new coins, which allows cryptocurrencies to work.

What is cryptocurrency mining?

Miners in ancient times extracted value from the earth with their tools, while cryptocurrency miners extracted value from the network thanks to computer programs.

When cryptocurrency mining is performed, the miner is putting the processing power at the service of a network; in this way, they confirm the transactions of their valid users.

All valid transactions are grouped into a block that is then added to the blockchain, thus processing the set of commercial operations securely.

Cryptocurrency mining in Spain

The purchase and sale of cryptocurrencies in Spain is not included in Value Added Tax but is recognized as an economic activity, subject to the tax regime.

Therefore, mining is not illegal in Spain, as long as the guidelines of the State are followed, which seek to protect users and prevent fraudulent movements.

The profitability of this activity depends on the money and time you invest in it, considering that for mining, you have to have special equipment to solve cryptographic problems, which entails high energy consumption.

For this reason, Spain is not a prosperous country for cryptocurrency mining since paying for electricity services will reduce profits.

READ MORE: Cryptocurrencies: What They Are and How to Invest

How to mine cryptocurrencies?

Cryptocurrency mining is relatively simple, but it requires some knowledge and understanding of its fundamentals to ensure that mining is safe and reliable.

When you mine cryptocurrencies, you verify transactions made on your network and issue new cryptocurrencies. For this, miners rely on two types of algorithms crucial to understand their operation: the mining and the consensus algorithms.

The mining algorithm takes care of complex cryptographic hash functions and adjusts the difficulty of mining.

The consensus algorithm is related to the agreement between users regarding its operation, fulfilling the validity criteria, the order of the blocks in the chain, etc.

What is cryptocurrency mining?

Well, the miner who validates the block suitable by consensus receives the reward; each cryptocurrency has different rewards; for example, in the case of Bitcoin, it is rewarded 6.25 BTC.

With the consensus algorithm, the miner quickly tries to get the answer to the riddle, allowing him to attach a new block of transactions to the chain.

The most exciting thing about mining cryptocurrencies is that you contribute to the validation of blocks, allowing user transactions and favouring decentralization.

What do you need to mine cryptocurrency?

To mine cryptocurrencies, we need a series of resources; These are the essentials:


The physical equipment will depend on the budget you invest in and the type of mining algorithm the cryptocurrency is programmed with.


The program that is needed to start mining is hardware that interacts with the cryptocurrency network and can mine it, such as, for example, CGMiner to mine Bitcoin.


Due to the mathematical calculations that the computer processor has to carry out, it is essential to control the cooling of the hardware to avoid heating.


The way to receive cryptocurrency payments is through a wallet address. But if you are looking for security, storing cryptocurrencies in a physical wallet is ideal.

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